TREND: In March, Mexico maintained its position as the US’s largest trade partner for the second month in a row while its trade with the US continues to grow, surpassing Canada and China by US $2.8 billion and US $5.7 billion, respectively. Canada’s presence in the US has grown significantly this year and has overtaken China as the US’ second-largest trade partner during the first quarter of 2021. Although China recovered by 21.48 percent compared to February, it was still not enough to surpass Mexico or keep its position over Canada. Mexico’s percent of total US trade decreased by 0.10 percentage while Canada’s has been growing consistently since January, closing at 14.50 percent this month compared to 13.8 percent in January. Both US exports to Mexico and US imports from Mexico grew this month compared to February 2021 and March 2020, hitting a record high for the last 10 years.
•Mexico’s bilateral trade flows have maintained a positive trend as total trade grew 17.40 percent this month compared to last month. US imports from Mexico grew 21.77 percent, while US exports to Mexico grew 11.70 percent. Both of these are all-time highs for March in any given year for the last ten years, signaling a solid recovery.
•Total US-Mexico bilateral trade will grow significantly during the second quarter -compared to last year-, as business contracted by more than 50 percent between March and May of last year.
•As of this month, Mexico is still the top trade partner of the US. Total US-Mexico trade in 2021 equals US $153.9 billion or 14.8 percent of total US trade, which is still greater than Canada (US $151.1 billion) and China (US $148.2 billion). Mexico trade represented a 14.8 percent share of total US trade in February 2021, which represents a 0.10 percentage point decrease compared to last month (14.9 percent). In March 2021, Canada surpassed China and changed its position in the top 5 US trade partners ranking: 1. Mexico, 2. Canada, 3. China, 4. Japan, and 5. Germany.
Top 5 US trade partners (as of March 2021; billions USD)
•As of March 2021, Mexico lost part of its participation as a top export destination for US products compared to February 2020 from 16.1 percent to 15.9 percent. Although it is still higher than January’s 15.3 percent share of total US exports, it is still behind Canada, which continued to grow (from 17.3 percent – 17.7 percent). US exports to China continued to decrease from 8.8 percent to 8.6 percent for the second month in a row. Last year, Canada closed the year with 17.8 percent and China with an 8.7 percent share of total US exports. Both China’s and Canada’s percent of total US exports are starting to look more similar to last year.
•US imports from China recovered in March. However, the decrease in US exports to China helped Mexico stay as the US’ largest trade partner. China is still the top source of US imports (17.8 percent of total), followed by Mexico (14.1 percent) and Canada (12.5 percent). However, china-s market share continued to contract significantly from 19.1 percent in January, and 18.3 percent in February. In 2020, China closed last year as the top source of US imports (18.6 percent of total), followed by Mexico (13.9 percent) and Canada (11.6 percent). We project that China will close this year as the top source of imports as well. Both Mexico and Canada are above their 2020 percent of total US imports.
•In March 202, all US import categories from Mexico grew compared to February 2021. However, the three categories that improved the most were: (i) Works of Art & Antiques (163.78 percent), (ii) Arms & Ammunition (31.98 percent), and mineral products (27.61 percent). The top 5 US imports from Mexico with the most growth this year compared to 2020 changed this month: (i) fur skins and artificial fur, (ii)fertilizers, (iii) vegetable textile fibers vegetable fiber & paper yarns & woven fabric (iv) food industry residues & waste, prep animal feed (v) albuminoidal; modified starch; glue enzymes.
•During the same period, US exports to Mexico grew in most sectors. Still, the three categories with the most growth compared to February 2021 were: (i) precious stones, metals, pearls & coins (70.18 percent), (ii) animal & vegetable fats, oils & waxes, (38.75 percent), (iii) wood pulp & cellulosic materials (33.56 percent), and (iv) wood & wood products. The top 5 US exports to Mexico compared to 2020 were (i) fur skins and artificial fur, (ii) manufacture of straw, esparto, etc.; basket ware and wickerwork, (iii) apparel articles and accessories, not knit, (iv) lac; gums, resins & other vegetable sap & extract, and (v) live animals. It is important to note that both of these categories measure percent growth rather than total monetary value change.
TAKEAWAY: Mexico kept its position as the US’ top trade partner. US-Mexico bilateral grew in both categories and closed the quarter with a firm footing. Canada also closed the month, surpassing China for the first time this year and strengthening its position as the second-largest trade partner. Both US exports and US imports from Mexico achieved record-high numbers in March. Mexico’s rise as the US’s top trade partner this quarter was a direct consequence of US-China trade tensions. In the second quarter, US-Mexico trade will continue its growth pattern compared to last year. More US-manufactured Covid-19 vaccines (like Pfizer-BioNTech) have started arriving in Mexico, and the US continues to make inroads with its successful vaccination program. We also expect an increased interest from both Asian and US companies to reactivate their supply chain and consider expansion projects in Mexico. Mexico’s fundamentals as a solid manufacturing hub are still present in 2021.
* Spotlight by José Burnes, AmCham/Mexico’s Trade & Investment Center Manager and Gaby Valdés, Trade & Investment Center Specialist. The American Chamber of Commerce of Mexico (AmCham/Mexico) seeks to facilitate commercial integration between Mexico and the US, build a favorable business environment, and contribute with proposals to consolidate Mexico’s competitiveness and development as a top destination for American investment. By connecting companies and sharing trends and market intelligence, its Trade & Investment Center boosts cross-border business. Twitter: @amchammexico